Thomas Sy, Head of Multi-Asset Solutions at New York Life Investments, said that, according to foreign media, the greater opportunity in tokenization may not lie in faster settlement or 24/7 trading, but in reimagining how investment portfolios are constructed. As Wall Street accelerates the migration of assets such as money market funds, private credit, and equities onto the blockchain, institutions are seeking new product structures better suited to the on-chain environment.
The focus isn't just about moving funds onto the blockchain.
Sy believes that the asset management industry will next place greater emphasis on customization, and blockchain is one of the few technologies capable of scaling this effectively. Traditional customized strategies often involve combining multiple asset classes such as ETFs, bonds, and private credit, resulting in lengthy operational chains and complex back-end processing, making it difficult to replicate for a large number of clients.
His view is that the value of tokenization lies not merely in creating on-chain versions of existing funds, but in embedding "customization capabilities" directly into the asset structure itself, reducing the extensive operational work surrounding different assets. As a result, the processes of building, adjusting, and holding portfolios could become much smoother.
Backend costs may decrease further
Sy noted that tokenization could also streamline transfer registration, settlement, and other back-office processes, thereby reducing operational costs. If these costs decrease by 10% to 20%, the ultimate beneficiaries will be customers.
Currently, multiple Wall Street banks, asset management firms, and market infrastructure companies are advancing the tokenization of real-world assets. Citibank previously predicted that the market size for tokenized real-world assets could grow from approximately $30 billion today to $5.5 trillion by 2030.
- The stablecoin market size has exceeded $300 billion.
- The current size of tokenized real-world assets is approximately $30 billion.
- Citi expects the market to reach $5.5 trillion by 2030.
Stablecoins first bring institutions on-chain.
Sy believes that over the past two years, stablecoins have served as the first practical bridge for traditional financial institutions to enter the blockchain. As banks, payment companies, and fintech firms adopt stablecoins for cross-border payments and fund management, institutions are likely to next seek yield-generating on-chain assets rather than leaving these balances idle in cash form.
Under this logic, demand for institutional-grade tokenized investment products is likely to continue growing over the coming years. The article suggests that this demand will not come solely from crypto-native users, but more likely from traditional financial participants who have already begun using stablecoins.
Institutional DeFi is still waiting for infrastructure to catch up.
Regarding DeFi, Sy noted that institutions are also exploring opportunities, but broader participation will depend on the maturation of infrastructure, including supporting capabilities such as tokenized collateral, central clearing, and prime brokerage services.
He believes that institutional DeFi still has application potential, but it will take some time before widespread adoption. In comparison, the integration between stablecoins and tokenized yield products may become the next step in connecting traditional asset management with on-chain finance sooner.